Bored? Read some funny short stories at LIFE: A Handbook of What Not to do

Thursday, August 12, 2010

Do do that Voodoo that we do...not so well

No one will disagree that America is in the midst of an economic crisis but how we handle this crisis is the topic of much debate.

Crying "Socialist", it seems, has become the preferred soundbite of the conservative right, both in politics and in the media. Preying on the fears and insecurities of the ever dissolving middle class in America, the Republican party and its proponents have attempted to define President Obama's endeavor to drag our nation out of its current economic cesspool as a slow, steady march toward Socialism. As evidence of this administrations socialist agenda, R's point to the Health Care Reform Law, tax increases for the wealthiest 1%, big business bailouts, and various social welfare policies. But is this Socialism, or rather, a form of Protectionism? Capitalism and Protectionism are not mutually exclusive.

Protectionism has historically been defined as the policy of restraining trade between states, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to discourage imports. A country as innovative as the United States could certainly implement a retooled version of Protectionism where rather than placing tariffs or taxes on imported goods, we implement taxes on exported jobs. With a nearly 10% unemployment rate, discouraging companies from shipping jobs overseas could provide a significant boost to our economy by lowering the unemployment rate and putting cash in consumers pockets.

Founding Father Alexander Hamilton was an advocate of Protectionism, which supports government intervention in favor of business. Hamilton was firmly opposed to the British policy of Free Trade, which America didn't entirely adopt until the 1980's when Ronald Reagan instituted Supply-Side economic policies.

Those who subscribe to the idea of Free Trade generally believe that any business should sink or swim on its own merit. They believe that supply and demand should be the ultimate determining factor in the price of goods and services, therefore, if a company is sick it is because it failed to create enough demand, subsequently becomes irrelevant and should be allowed to die.

Good parents may say it is important for children to learn to be independent. Encouraging a child to solve their own problems allows them to take credit for their own accomplishments while learning from their mistakes. The "sink or swim" philosophy may be good parenting, still, any good parent would not hesitate to interfere if their child were actually drowning in a body of water. So the question remains: Though "sink or swim" may build strong character, does it build a strong economy? We are all the parents, in a sense, to our country. We created it, we love it, we nurture and protect it. Now that it is drowning, is it un-American to interfere?

Supporters of Supply-Side economics (sometimes known as "trickle down" or "voodoo" economics) believe that relaxing government regulations and lowering taxes for wealthy business owners creates an environment where businesses can more easily produce goods and services at a lower cost, which in turn, allows them to sell their goods at a more reasonable rate to the public and should increase sales and boost the economy. Opponents of this idea believe the policy doesn't take in to account human greed. Though it may cost you less to produce goods, there is no incentive to reduce the end price. Lower taxes and less government regulation combined with high prices allows the rich to get richer; which is why many believe that a more logical solution would be to focus on protecting consumers rights and lowering taxes for the lower and middle classes which would create more disposable income for consumers, increasing sales and boosting the economy.

Jean-Baptiste Colbert was famous for bringing the French economy back from the brink of bankruptcy by implementing Protectionism, encouraging the increased manufacture of goods, and creating consumer protection laws. Many economists have argued that a fatal flaw in the American economic system is that it failed to anticipate the current situation wherein our country, for the most part, no longer manufactures anything. We could kill two birds with one stone (those being our economic albatross and our fossil fuel dodo) by reducing our import of foreign oil with the creation of American made green energy. Getting America building, creating, and innovating once again would undoubtedly not only provide a boost to our economy, but a boost to our national self-esteem as well. New green energy jobs would put more Americans back to work and purchasing our energy locally rather than importing it from volatile foreign countries keeps American dollars in American pockets. With fossil fuels being an ever disappearing finite resource it makes sense to create alternatives now. And with the current situation in the middle east we can all agree that we would like to eliminate our dependency on relationships with oil producing countries.

It should be noted, however, that despite Jean-Baptiste Colbert's efforts, France ultimately became increasingly impoverished because of the King's excessive spending on wars. Unfortunately, our own war spending could be the determining nail in Americas economic coffin.

No comments:

Post a Comment